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Research & Commentary: Low-Carbon Fuel Standard Would Be a Bad Deal for Washingtonians

March 25, 2019

Gasoline Prices Could Rise By 34 Cents Per Gallon To Meet Program Emissions Goals

Legislation making its way through the Washington State Legislature would establish a low-carbon fuel standard (LCFS) in the Evergreen State, beginning no later than January 1, 2021.

LCFS standards are designed to decrease the carbon-dioxide content of gasoline and diesel fuel to curb carbon dioxide emissions, mainly through the expanded use of biofuel mixtures in gasoline and diesel fuels. However, the LCFS would also work like a cap-and-trade program, allowing fuel suppliers to buy “credits” from suppliers of transportation fuels with low carbon-dioxide intensity, such as natural gas, electricity, and propone. 

Under the bill, the state’s Department of Ecology would establish the Clean Fuels Program, which would mandate the limiting of the carbon dioxide intensity of transportation fuels to 10 percent below 2017 levels by 2028 and 20 percent below 2017 levels by 2035. The program is modeled after similar programs in California and Oregon.

Mandates resembling the LCFS disproportionally impact lower-income households by raising the price of motor fuels, which increases the price of goods and services across the economy and makes it more expensive for people to travel back and forth between home and work. Lower-income households are the least likely to be able to absorb these new costs. 

Data presented to the California Energy Commission in February 2019 show California’s LCFS is adding roughly 16 cents per gallon to the price of gasoline and diesel fuel. Stillwater Associates estimates these prices will rise by 20 cents per gallon by 2020 and the California Legislative Analyst’s Office predicts prices will rise by 41 cents per gallon by 2040.

Based on testimony from the Low Carbon Fuels Coalition before the Washington House Environment and Energy Committee showing that the cost to reduce one metric ton of carbon dioxide under LCFS would be roughly $190, the Washington Policy Center estimates LCFS would add 17 cents per gallon “for every 10 percent reduction in CO2 from gasoline.” Thus, 34 cents per each gallon would need to be added to the price of gasoline to meet the program’s 2035 goals.

It should also be noted that Washington’s Climate Legislative Executive Work Group concluded in 2014 a LCFS is not an efficient program to help the state meet its greenhouse gas reduction targets.

Further, the fuel stock required for an LCFS program in Washington simply does not exist in commercial quantities. This is also true of California, according to a report prepared for the California Air Resources Board by researchers at the University of California at Davis.

It’s also important to keep in mind biofuels are not necessarily more environmentally friendly than conventional gasoline. Research published in Science, a peer-reviewed journal, found production and use of one gallon of ethanol emits more carbon dioxide than a gallon of gasoline. Another peer-reviewed study in the journal Nature Climate Change found cellulosic ethanol increases carbon-dioxide emissions by 7 percent compared to gasoline.

Algae biofuels are no better, as a 2012 study from the National Research Council Sciences reports “the scale-up of algal biofuel production sufficient to meet at least 5 percent of U.S. demand for transportation fuels would place unsustainable demands on energy, water, and nutrients.”

At 49.40 cents per gallon a piece, Washington motorists already pay the third highest state gasoline and diesel taxes in the nation, behind only California and Pennsylvania. Evergreen State lawmakers should not enact the inefficient LCFS, which would have a minimal effect on global carbon-dioxide emissions and cause considerable economic harm to all Washingtonians, especially those with low incomes, who can least afford a tax increase.

The following document provides more information about low-carbon fuel standards, fossil fuels, and cap-and-trade programs.

Legislating Energy Poverty: A Case Study of How California’s and New York’s Climate Change Policies Are Increasing Energy Costs and Hurting the Economy
https://www.pacificresearch.org/wp-content/uploads/2018/12/LegislatingEnergy_F_Web.pdf
This analysis from Wayne Winegarden of the Pacific Research Institute shows the big government approach to fighting climate change taken by California and New York hits working class and minority communities the hardest. The paper reviews the impact of global warming policies adopted in California and New York, such as unrealistic renewable energy goals, strict low carbon fuel standards, and costly subsidies for buying higher-priced electric cars and installing solar panels. The report finds that, collectively, these expensive and burdensome policies are dramatically increasing the energy burdens of their respective state residents.

The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
https://files.texaspolicy.com/uploads/2018/11/27165514/2018-11-RR-US-Leads-the-World-in-Clean-Air-ACEE-White.pdf
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.

Ten State Solutions to Emerging Issues
https://www.heartland.org/publications-resources/publications/ten-state-solutions-to-emerging-issues-2018
This Heartland Institute booklet explores solutions to the top public policy issues facing the states in 2018 and beyond in the areas of budget and taxes, education, energy and environment, health care, and constitutional reform. The solutions identified are proven reform ideas that have garnered significant support among the states and with legislators.

Less Carbon, Higher Prices: How California’s Climate Policies Affect Lower-Income Residents
https://www.heartland.org/publications-resources/publications/less-carbon-higher-prices-how-californias-climate-policies-affect-lower-income-residents
This study from Jonathan Lesser of the Manhattan Institute argues California’s clean power regulations, including the state’s renewable power mandate, is a regressive tax that harms impoverished Californians more than any other group.

Five Myths of Cap-and-Trade
https://www.heartland.org/publications-resources/publications/five-myths-of-cap-and-trade
Articles supporting cap-and-trade programs rest on a number of fallacies. In this article by Todd Myers of the Washington Policy Center, Myers identifies and explores five persistent myths concerning cap-and-trade, including the belief that a cap on carbon dioxide emissions guarantees emissions reduction.

Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers
https://www.heartland.org/publications-resources/publications/climate-change-reconsidered-ii-fossil-fuels---summary-for-policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).

The Social Benefits of Fossil Fuels
https://www.heartland.org/publications-resources/publications/the-social-benefits-of-fossil-fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Lindsey Stroud, a state government relations manager at The Heartland Institute, at lstroud@heartland.org or 312/377-4000.